Transcript

New data shows a widening of the 2009 deficit and Brussels has warned the Greek government that there are fresh doubts over its finance figures.

The news comes after a lukewarm take up of Greek bonds and a battering on financial markets.

Alicia Barry reports.

ALICIA BARRY, REPORTER: As talks began in Athens about Greece's $48 billion rescue package investors showed their disapproval by walking away from Greek bonds despite the offer of a record 8 per cent interest rate.

JOHN NOONAN, SENIOR FX STRATEGIST, THOMSON REUTERS: It was hoped that when they came up with that package two weeks ago that investors would be encouraged by Greek bonds because they had a back stop, they had the backing of the IMF. Investors donít see it that way at all.

ALICIA BARRY: Officials from the European Union, the International Monetary Fund and the European Central Bank are expected to take two weeks to finalise the details of the package, creating more uncertainty for bond markets.

Greece needs to raise $14 billion to pay down debt by the middle of May so if investors won't come to the party itís likely Greece will have to call on the emergency package.

JOHN NOONAN: But investors are still worried that even if they do get 45 billion between the EU and the International Monetary Fund bailout, Greece will still have to raise debt for future rollovers, they will still have to follow a very strict austerity program that would be put out by the IMF and the EU and thereís already rioting in the streets.

ALICIA BARRY: It's not just at test for the country but also of the European Union's credibility.

THOMAS BOULOUTAS, CEO, MARFIN BANK: If we are to remain in a single economic block, we need to devise policies of being more closely aligned together in the instances like the one Greece is facing currently. We need to find the mechanism of how to overcome the situation without being burdened.

ALICIA BARRY: Locally markets appear to have priced in Greece's sovereign debt issues while they are contained to that country, but investors here are keeping a keen eye over those talks between the EU, the IMF and Greece.

But for now they're focused on the improving situation in Asia.

JOHN NOONAN: Central banks around the world are very buoyant. The RBA has raised rates. We've seen rate hikes and tightenings in Malaysia and Singapore. That's really signalling to investors in Asia that the world is returning to normal again.

ALICIA BARRY: The latest report from the IMF highlights Australia as a standout performer, benefiting from its geographic location.

BRIAN REDICAN, SENIOR ECONOMIST, MACQUARIE BANK: We're in the right neighbourhood at the moment. Basically, Asia is where all the growth is happening. Their demand for commodities is going through the roof and we are perfectly positioned to supply where that demand is coming from.

ALICIA BARRY: And that demand, according to the IMF shouldn't wane, at least for some time.